Lately, most investors have been extremely fearful of Chinese stocks. Continued lockdowns and various geopolitical concerns have amplified a bearish macroeconomic picture for these companies, making it challenging to find good Chinese stocks to buy.
That said, China is the world’s second-largest economy. And Chinese stocks have previously been among the top performers in the previous bull market, while many of these stocks have actually outperformed recently, for good reason.
China’s remaining zero-Covid policies provide a challenge which is too strong for many long-term investors.
But these lockdowns appear to be getting less invasive, the Communist Party is seeing significant resistance to the lockdowns, and officials have indicated that they could be ready to ease lockdowns further, leading many to believe that we could be nearing the end of this whole debacle. If that’s the case, there may be a nice rally by most Chinese stocks in 2023.
Here are three of the best options for long-term investors looking for value in China. These companies have tremendous growth potential.
|DQ||Daqo New Energy||$51.12|
Daqo New Energy (DQ)
Among the Chinese stocks I haven’t covered very closely in the past, Daqo New Energy (NYSE:DQ) is a company I think is worth considering. That’s because it’s focused on polysilicon manufacturing.
Polysilicon is a key material used in the solar panel space. I remain bullish on the long-term, non-cyclical catalysts that should continue to take renewable energy stocks higher.
While most investors are focused on energy security and building a diversified energy portfolio, including fossil fuel stocks, solar power will continue to grow in importance over time. Daqo is among the leading providers of low-cost solar panels, which are much-needed for the global transition to green energy.
Over the long term, I think DQ will continue to be very profitable. Analysts, on average, estimate that the company will generate earnings per share of $27.44 in 2022. That’s an incredible jump from the 64 cents of EPS that the company posted in 2019.
While tariffs and other geopolitical issues have hit this stock, I think that, over the long term, there are few Chinese stocks to buy that are as solid as DQ is right now. This is a beaten-down gem, for those with a multi-year investing time horizon.
With China’s crackdown on its technology sector, few companies have been spared from the pain. Pinduoduo (NASDAQ:PDD) has been among the hardest hit, given the company’s status as the third-largest e-commerce portal in China.
This is one tech-driven stock that both institutional and retail investors have their eyes on. With China still using lockdowns for now, more and more people will be buying things online.
Many consumers are probably utilizing e-commerce companies like Pinduoduo that provide food and other staples at a reasonable price to most parts of the massive Chinese market. And when restrictions are eventually lifted, one could make the argument that its current growth levels can be sustained, assuming shoppers continue their previous patterns.
The adoption of e-commerce platforms such as Pinduoduo in China has been remarkable. I think this is a stock that has been unfairly beaten down recently due to negative macro headlines. Thus, for long-term investors seeking Chinese stocks to buy, PDD is one to consider right now.
BYD Company (BYDDY)
In the world of Chinese EV stocks, BYD Company (OTCMKTS:BYDDY) is the market leader many investors may not have heard of. BYD is the largest EV producer in China, providing among the most robust fundamentals of any stock in the Asian country right now.
Warren Buffett has certainly noticed this, as he made a significant investment in the fast-growing company. Other prominent institutional investors have also jumped aboard BYDDF stock, seeing it as a way to play Chinese growth.
Accordingly, despite many international automakers looking to penetrate the Chinese market, it’s clear that some investors believe that China will focus on home-grown solutions, including BYD’s EVs, to its pollution problems and climate change.
The company’s top line has surged higher, driven by soaring sales of its Tang and Han models. Additionally, BYD plans on extensively expanding its international presence. To do that, the company is willing to invest heavily in building its brands in other key markets.
The company has already gained significant traction in that area, positioning BYD to potentially become the biggest automaker in the Asia Pacific region over the long-term.
One key catalyst that I think could bring BYD closer to that goal is its focus on improving its batteries. Next year, BYD will start making sodium-ion batteries. Assuming this technology gains traction, BYD could potentially dominate the EV market in Asia and globally.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.